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Afternoon Market Recap for Nov. 20, 2019

Grains stumble on trade concerns

Corn and soybeans see moderate cuts, while wheat continues to climb

Corn and soybean futures sputtered Wednesday after lingering concerns the U.S. and China won’t reach even a phase-one trade agreement in 2019 sparked some technical selling. Favorable weather in Argentina and Brazil applied additional headwinds, as did harvest pressure in the U.S. Corn futures fell 1%, reaching two-month lows, while soybeans fell around 0.75%.

Winter wheat futures, on the other hand, rose for a second consecutive session on some technical buying and short-covering amid concerns over domestic crop quality. Spring wheat futures trended modestly lower.

A round of warmer-than-normal weather will attempt to hold through the middle of next week, although below-average daytime highs will be likely by Thanksgiving. The latest seven-day cumulative precipitation map from NOAA shows plenty of rain and snow possible for most of the Corn Belt and Mid-South through November 27, with another 1” to 3” additional precipitation likely during that time.

On Wall St., traders shrugged off positive retail data, which was more than offset by trade worries and poor-performing financial stocks. The Dow dropped 163points in afternoon trading to 27,771. Energy futures climbed substantially higher, partly due to lower-than-expected domestic crude oil inventories. Crude oil trended 3.5% higher this afternoon to move back above $57 per barrel, with gasoline and diesel also tracking much higher. The U.S. Dollar firmed slightly.

Commodity funds were net sellers of corn (-14,500), soybeans (-9,500) and soymeal (-5,000) today, and they were net buyers of CBOT wheat (+3,000) and soyoil (+5,500).

Corn prices fell around 1% Wednesday as a mix of concerns – from favorable forecasts in South America to unfavorable U.S.-China trade war updates – triggered a round of technical selling. December futures dropped 3.25 cents to $3.6675, with March futures down 3.5 cents to $3.7725.

Corn basis bids were steady to soft Wednesday, dropping 2 to 3 cents across several interior river terminals and a Nebraska processor today. An Indiana ethanol plant bucked the overall trend after rising 2 cents.

Ahead of Thursday morning’s USDA export report, analysts expect the agency to show corn sales totaling between 15.7 million and 35.4 million bushels for the week ending November 14.

Ethanol production has crept higher for an eighth consecutive week, reaching a daily average of 1.033 million barrels for the week ending November 15. January ethanol futures slid slightly lower, to $1.381.

Farmers reporting to Feedback From The Field in November saw corn yields average 167.4 bushels per acre, just slightly higher than the 167 bpa estimated by USDA Nov. 8. Individual fields continue to show wide variance, however, with a range of 100 to 220 bpa. Click here to read the latest round of farmer anecdotes and view our interactive map.

Meantime, USDA issued a statement earlier today that the agency will continue to report crop progress updates past November 25, which is the last date it typically issues such data, because of delays in this year’s corn and soybean harvests.

South Korean buyers purchased another 5.1 million bushels of corn from optional origins in two private deal earlier today. The grain is for shipment in December or January.

Indian buyers issued an international tender to purchase 3.9 million bushels of corn from Ukraine that closes December 3.

Preliminary volume estimates were for 587,919 contracts, tracking 42% higher than Tuesday’s final count of 412,675.

Soybean prices fell on pessimism regarding U.S.-China trade negotiations, although expectations for another solid round of export data out Thursday morning kept prices from drifting even lower. January futures dropped 6.5 cents to $9.05, with March futures down 5.5 cents to $9.19.

Soybean basis bids were largely steady Wednesday, although they did rise 5 cents at an Indiana processor while dipping 2 cents lower at an Ohio elevator and an Illinois river terminal today.

The U.S. and China are reportedly continuing “tough negotiations” as the two counties hope to finalize and sign a phase-one trade deal in the near future, although “U.S. officials have differing views on how much phase one would cover and what portion of the tariffs the Trump administration should agree to roll back,” according to reporting from Bloomberg. Click here to learn more.

“If talks are really going well, [tariff hikes] will be suspended,” says Christian Whiton, a senior fellow for strategy and trade at the Center for the National Interest, and a former Trump and George W. Bush administration adviser. “If not, the U.S. will implement them and that will throw the game into next year.”

Ahead of Thursday morning’s USDA export report, analysts expect the agency to show soybean sales totaling between 29.4 million and 51.4 million bushels for the week ending November 14. Exports would need to reach the high end of that range to best the prior week’s tally of 46.0 million bushels.

Analysts also think USDA will report another 100,000 to 450,000 metric tons of soymeal sales last week, plus 5,000 to 25,000 MT of soyoil sales.

Egypt plans to double its soybean acres this season (still a very modest 79,000 acres) to help lower its dependence on vegetable oil imports. The country hopes production will top 4.7 million bushels.

Preliminary volume estimates were for 198,496 contracts, trending moderately above Tuesday’s final count of 161,263.

Wheat prices were mixed but mostly higher, with CBOT contracts leading the way on a round of technical buying. December Chicago SRW futures picked up 3.5 cents to $5.1550, December Kansas City HRW futures held steady at $4.2575, and December MGEX spring wheat futures slipped 2 cents to $5.0125.

Ahead of Thursday morning’s USDA export report, analysts expect the agency to show wheat sales totaling between 7.3 million and 18.4 million bushels for the week ending November 14.

Syria issued an international tender to purchase 5.5 million bushels of soft wheat from Russia that closes December 18, with shipment likely in February.

China sold 1.9 million bushels of its state reserves of wheat at auction Wednesday, which was 1.7% of the total available for sale.

Jordan purchased 2.2 million bushels of hard milling wheat from optional origins in a tender that closed yesterday. The grain is for shipment in February.

Preliminary volume estimates were for 95,846 CBOT contracts, falling 43% below Tuesday’s final count of 167,413.


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